Historically the matter of restrictive covenants (aka “covenants not to compete” or “non-competes”) and their enforceability has been delegated to the states in the U.S. Employers in Ohio have for many years had the opportunity to include reasonable non-competes in their employee agreements with general confidence that if the restrictions were ever challenged in a court of law they would be upheld as enforceable or, worse case scenario, reduced to what the court held to be “reasonable”. But with noticeable changes in other states throughout the U.S., and current proposals on the federal level, Ohio could potentially face some major changes to its restrictive covenant regulations.

While Ohio has allowed Employers to include reasonable non-competes based on the employer’s right to protect its business interest, other states have taken an opposing view on the matter. Most notably, California’s position on non-competes has been to practically abolish them. Other states, including Washington, Oregon and Massachusetts, have made significant changes to their laws that, while not abolishing non-competes per se, have restricted their use making enforcement more difficult.

More recently, the federal government has taken a stab at non-competes asking the Federal Trade Commission to review them and abolish or restrict them as a violation of Section 5 of the Federal Trade Commission Act that prohibits unfair or deceptive acts or practices in or affecting commerce. In January of this year the FTC voted to proceed with notice of a proposed rule that would effectively bar employers from entering into non-competes with their employees or independent contractors and require employers to rescind existing non-competes. The proposed rule was published for public comment until March 20, 2023, and that time was subsequently extended so that, to date, this matter has not been resolved. If in fact the FTC’s proposed rule ever goes into effect, it would seriously change the landscape in Ohio for employers’ use of non-competes.

Please contact Thomas Law Group with any questions you may have. Our Attorneys will stay up to date on the potential changes that could affect Ohio employers and their contracts, and our firm will be happy to assist you with any changes you may need to make going forward.